Internet Resources

By on August 28, 2006

Originally published in March 1998:

The economic growth experienced over the decade of the 90’s has been impressive. But as this century comes to a close the situation surrounding our division of wealth and technological development is on the verge of becoming a monumental issue. Society is only in the beginning stages of exploiting the possibilities of computer technology. What we are likely to witness in the 15 years going forward (I’m getting tired of that expression…of course I’m not talking about the 15 years going backward!) is the beginning of the end of work as we know it. Computer automation, which is falling in price and increasing in capability, will be able to perform an increasing share of the tasks relegated to the working class. This will result in a meagerly educated underclass with little paying work to do. Those who control the means of production will have almost complete control of society’s wealth, while those who hold no productive assets will experience the withering of their incomes at an increasing rate. I don’t want to sound like a Luddite, but in several years the dislocations caused by improving automated systems may become so problematic as to create the seeds for a revolution.

On to the markets. The stock market continues to surge, but in my opinion, this won’t continue. Allow me to explain why I feel this way. On June 13, 1993 I purchased a company by the name of Dell Computer (NASDAQ: DELL; 139 7/8) for my mother’s account. You may have heard of it. Unfortunately, I didn’t buy any for myself. The reason I say this is because it’s up 54-fold since June of ’93. Peter Lynch would call it a 54 bagger. I spoke to a couple of my friends about the market recently and both mentioned Dell. One was thinking about buying it and the other bought it just recently. Dell is trading at 50 times peak earnings in what has traditionally been a very cyclical business. I wish my friends luck, but the risks at this juncture with a company like Dell are tremendous. I expect the Dow will probably trade in a range of 8,000 to 8,600 for the next few months.

Internet Resources

The internet is a great resource for the investor. There is an amazing amount of free information and you don’t have to look too hard to find it. Two webzines I regularly visit are the Businessweek and Forbes sites. Forbes has numerous interesting articles and editorials. The Businessweek site has all of the articles of the magazine and their international editions. However, the publisher has indicated that they will begin charging for it sometime in the near future. However, there are plenty of other sites that are free of charge to make up for their defection.

This doesn’t have anything to do with investing, but if you have anything to sell, look into free classified advertising at the Yahoo! and Classifieds2000 sites. I just recently sold a bedroom furniture set on the internet and it didn’t cost me a dime. I placed the ad on a Saturday and got a call the next day. A nice feature about these ads, besides being free, is that you can delete them as soon as you sell your item, which kills the unwanted phone calls afterwards.

Portfolio Updates

I’m hoping for a strong comeback from Novellus Systems (NASDAQ: NVLS; 47 15/16), which specializes in semiconductor manufacturing equipment. NVLS will benefit from the move to the .25 submicron manufacturing process. The reduction in size of semiconductors will allow for smaller electronic devices and a reduction in power consumption due to shorter connection lengths. This will allow for significantly longer battery life in laptop and notebook computers. All of the semiconductor manufacturers will have to upgrade their equipment if they hope to compete, which should mean higher sales and earnings for NVLS. Discover Magazine has a very informative article on the recent developments in semiconductor technology.

Recommended Allocations

Aggressive portfolios: 75% equities, 25% cash.

Conservative portfolios: 55% equities, 45% cash.

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